Question

If the average revenue is 45 and clasticity of demand is 3 then marginal revenue is ______.

Answer 1

If the average revenue is 45 and clasticity of demand is 3 then marginal revenue is 30.

Explanation:

1. Identify the given values

The problem provides two key economic variables:

Average Revenue (AR): 45

Elasticity of Demand (e): 3

2. Apply the Revenue-Elasticity formula

The mathematical relationship between marginal revenue (MR), average revenue (AR), and price elasticity of demand (e) is defined by the following equation:

`"MR" = "AR" xx (1 - 1/e)` 

3. Calculate the Marginal Revenue

Substitute the given values into the formula to find the result:

1. Substitute values: MR = `45 xx (1 - 1/3)`

2. Simplify the expression: MR = `45 xx (2/3)`

3. Perform final calculation: MR = `90/3` = 30